http://thestar.com.my/news/story.asp?file=/2013/2/27/worldupdates/struggling-slovenia-set-to-get-new-pm-to-rescue-economy&sec=Worldupdates
LJUBLJANA (Reuters) - Financial expert Alenka Bratusek is expected to get a one-year mandate to pull struggling euro zone member Slovenia back from the brink of a financial bailout when parliament votes on Wednesday to oust conservative Prime Minister Janez Jansa.
Parliament's scheduled "constructive no-confidence vote" takes place at the height of a financial crisis in the tiny Alpine ex-Yugoslav republic, which is wrestling with recession and a huge amount of bad loans strangling its banks.
The new government will have to reform the banking system, which is nursing 7 billion euros (6 billion pounds) of bad loans, increase labour flexibility, sell some state firms and possibly raise the value added tax to reduce the budget gap.
Export-oriented Slovenia was badly hit by the global crisis and fell into a new recession last year. The government crisis slowed badly needed reforms and revived speculation it might become a sixth euro zone member in need of a bailout.
For some Slovenes, who have taken to the streets in their thousands to rally against corruption and the political elite since November, a change of prime minister was only a fig leaf.
"Nothing will improve until all the politicians are changed," said graphic designer Miha Skalar. "They all think the same way."
Parliament will probably vote on Bratusek's proposed cabinet in late March.
My view:
In late 2011 I wrote a post on a possible exit from the Euro for Slovenia.
My analysis remains more or less the same. A small exporting country is trapped in a cycle of increasing debt because of an over-leveraged banking system.
The only apparent way out is to return to a national currency and exit the Euro.
As the continuing decline of Greece shows, being bailed out is not a long term solution.
One other possibility remains.
Germany exits the Euro and leaves the spendthrift nations behind. But this has a large export cost to Germany, the second largest exporting nation on earth. The new currency - the Deutsche Mark - would likely rise substantially as the remnant Euro drops.
No good news for German exports under this scenario - so my number 1 hypothesis is a Euro exit by some of the smaller economies.
In late 2011 I wrote a post on a possible exit from the Euro for Slovenia.
My analysis remains more or less the same. A small exporting country is trapped in a cycle of increasing debt because of an over-leveraged banking system.
The only apparent way out is to return to a national currency and exit the Euro.
As the continuing decline of Greece shows, being bailed out is not a long term solution.
One other possibility remains.
Germany exits the Euro and leaves the spendthrift nations behind. But this has a large export cost to Germany, the second largest exporting nation on earth. The new currency - the Deutsche Mark - would likely rise substantially as the remnant Euro drops.
No good news for German exports under this scenario - so my number 1 hypothesis is a Euro exit by some of the smaller economies.
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